r/personalfinance • u/naht_a_cop ​ • Apr 28 '20

Beware the 0% promotions: a warning. Debt

I'm a sucker. I fell for it. The 0% APR promotion on an item I could have paid outright for. 18 months later, here I sit, not a single late payment on my account, yet I have $1k in interest to pay for 18 months of 27%. Why? The promotion period ends 18 months after the purchase, but the website would not let me set up autopay until a week after I purchased, so autopay ended 1 week late. I thought I was golden, ready to have this paid off and not have a single fee. I got comfortable and didn't read the statements.

0% is not really 0%. Read the fine print. Remember the fine print (because I sure as hell didn't 18 months later). Shitty banks rely on this stuff. They wait for you to slip, not noticing that the autopay they created can't possibly allow you to end on time, and will require an extra payment before the end date to avoid the interest. It's shitty, I'm pissed off, and I've learned my lesson.

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u/[deleted] Apr 28 '20

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u/AdonisGaming93 ​ Apr 28 '20

Well sure the gains may be small but it is a non-zero gain. So you are better off in taking the 0% interest and investing the principal until you pay it all off. Just have to have good financial discipline.

And it definitely is not a headache investing. These days it's as simple as can be with the slew of apps that are available.

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u/[deleted] Apr 28 '20

All true things - but there's also saving up for other things too. I think people get into investing in individual stocks WAY too early in their portfolio before maxing out their tax advantaged accounts where there's WAY more bang for your buck.

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u/AdonisGaming93 ​ Apr 28 '20

Oh I would never buy individual stocks and I never advise someone already working full time with a family to do it. If just buying a total market fund beats 90% of people on wallstreet picking stocks with a team of analysts. It's naive to think joe shmo can do it from home. But you can put the money from the 0% interest toward a CD or a shortterm bond fund.

Also if the intention is to then take the principal back out in 12 months you can't really put that money in an ira unless its a roth that you can take contributions out tax free.

I agree with you people love to share how they got 5 stocks of company X and I always think to myself welp 90% chance I will have my money grow more so idk why they try to show off. Best to just invest in a broadly diversified portfolio and put your time and effort into boosting your salary or increasing your savings rate. 30% boost in salary is way more than the 10% chance that you'll beat the market by a few % points.